* Ups FY profit forecast to 540 mln euros from 490-520 mln
* Average fares surge 8 percent in three months to December
* UK, Germany, Scandinavia unexpectedly strong
By Conor Humphries
DUBLIN, Jan 28 Ryanair hiked its
full-year profit forecast on Monday as strong demand in Northern
Europe lifted average fares dramatically in the last three
months of 2012.
Dublin-based Ryanair, Europe's top low-cost airline, which
has used its size and low costs to undercut struggling flag
carriers, hiked its profit forecast to 540 million euros ($728
million) for the year to March, up from an earlier 490-520
million euro range.
"We saw strong demand out of the UK, out of Germany and out
of Scandinavia and that has gone straight to our bottom line,"
Chief Operating Officer Michael Cawley told Reuters.
Strong demand in the run-up to Christmas and a high uptake
of reserved seating options helped to lift ticket prices in
northern Europe well above the company's forecasts, he said.
Sales were not as buoyant in Southern Europe, with Spain in
particular "very weak," and fare growth in Italy flat, he said.
An 8 percent rise in average fares lifted the airline to a
profit of 18 million euros in the traditionally weak three
months to December, compared with an average forecast by five
analysts polled by Reuters of a 5 million euro loss.
Fare growth compared with 5 percent in the six months to
September and was way ahead of the 3 percent average forecast by
three analysts polled by Reuters.
Average fares will grow at a slower pace in the three months
to March, however, Cawley said.
Ryanair has been able to sweep up customers as traditional
rivals cut back capacity in the face of slow economic growth in
Europe and high fuel costs.
Revenues climbed 15 percent to 969 million euros in the
quarter, better than the 9.2 percent revenue growth its chief
low cost rival easyJet reported last week.
Ancillary revenues, which exclude ticket prices, were up 24
percent from a year earlier.
"Demand is exceeding supply in the short-haul market and
Ryanair is capitalising on it," said Davy stockbrokers analyst
Stephen Furlong. "The market will be very happy with these
Higher fares helped Ryanair absorb a 24 percent hike in fuel
costs compared with the same quarter last year. Fuel cost
inflation is expected to ease to 5 percent in the year to March
2014 from 14 percent in the current financial year.
Excluding fuel, unit costs rose 4 percent in the quarter due
to increases in Italian air traffic control costs, Spanish
airport charges and the strength of Sterling to the Euro,
Next year fares will continue to rise though capacity will
likely only grow by 2-3 percent in the financial year to March
2014, Cawley said, down from the 4 percent rise forecast in the
current year, due to the lack of new plane deliveries planned.
The airline remains in "protracted negotiations" with Boeing
about a large plane order, Cawley said.
In a separate statement, Ryanair said it remained confident
European Union antitrust regulators would approve its bid for
Irish rival Aer Lingus by March.
Ryanair's shares opened down 1 percent on Monday at 5.42,
compared with a fall of 0.2 percent on the broader Irish market